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Can a subcontractor file a mechanics lien when payment has not been made?

One of our subs on a public entity contract ( I am the prime contractor) filed a mechanics lien for work in which we have not received payment from the owner for yet. As a prime contractor under PPA, dont we have 7 days after payment is received to pay our subcontractors? What happens since payment has not been received by the owner? Also, can the owner hold back more than what the lien amount is for? Lastly, the subcontractor filed the lien with the actual property owner, not the owner for whom we have a contract with. Can the owner still make a payment to us since they are not mentioned on the lien? Thank you for all your help!

1 reply

Dec 12, 2019

The New York PPA (Prompt Payment Act) in most instances does not supersede the terms of the contract. Therefore, if payment is contractually past due, the PPA would not prohibit the filing of a mechanic's lien by a subcontractor. The lack of payment by the owner is not a defense to paying a subcontractor. New York does not recognize "pay if paid" clauses. The holdback by the owner is largely dictated by the terms of the contract but, in most instances, the owner will hold back more than 100% of the lien since the exposure to the owner can be greater than the face value of the lien. Lastly, you indicate that the lien was filed with the "property owner" but that this was also a "public entity contract." A mechanic's lien cannot be placed against land owned by a public entity in New York. A mechanic's lien on a public project is placed against the lien fund, not the actual real property. Check to make sure the lien was properly recorded.

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